On Tuesday, we will see the first Spring Statement, a low-key affair in which the Chancellor will provide the economic and public finance forecasts from the Office of Budget Responsibility.
In 2016, the Tory chancellor revealed he was moving the Budget from Spring to Autumn. He announced that the Budget in November would be followed by a “Spring Statement” in March.
Speaking on the BBC’s Andrew Marr Show at the weekend, Mr Hammond warned that he would not relax his grip on public finances despite seeing “light at the end of the tunnel” for the economy after years of austerity.
He said that Britain’s debt mountain was still too high and had to be brought down.
Here’s what we are expecting from Tuesday’s statement and everything we know already…
When is it?
Mr Hammond will address the House of Commons on Tuesday, shortly after MPs have completed other questions on the agenda.
His speech will most likely begin at 12.30pm and last less than half hour. The entire debate is expected to last about two hours.
The speech will provide a snapshot into public finances and the state of the UK economy.
What is expected?
Experts believe the statement will announce a little economic cheer with lower borrowing forecasts than previously expected.
Economists have predicted a boost for short-term growth forecasts as the global economy powers ahead.
This is expected to be accompanied by a drop in Government borrowing for 2017-18 by as much as £7 billion.
The Chancellor, however, is not likely to announce any tax giveaways and will probably bank the windfall as a much-needed buffer ahead of Brexit.
The impact of Britain’s EU divorce bill on the public finances is set to be laid bare for the first time alongside the statement.
The Office for Budget Responsibility (OBR) will estimate the hit to the public purse from Brexit payments to the EU every year for decades going forward.
This follows the Government’s agreement to pay between £35 billion and £39 billion under an initial Brexit settlement.
Mr Hammond will likely want to hold on to any extra funds and make a more informed decision in his Autumn Budget, when the outlook of the Brexit deal is expected to be made clearer.
John Hawksworth, chief economist at PwC, said that while the Chancellor will hold on to any borrowing boost ahead of Brexit uncertainties, he is expecting “more significant tax and spending announcements in the Budget in November”.
What has Mr Hammond already revealed about the statement?
On the BBC’s Andrew Marr show on Sunday, the Chancellor said Britain’s debt mountain was still too high and had to be be brought down.
“There is light at the end of the tunnel because what we are about to see is debt starting to fall after it has been growing for 17 continuous years. That is a very important moment for us but we are still in the tunnel at the moment,” he said.
“We have a debt of £1.8 trillion – 86.5 per cent of our GDP. All the international organisations recognise that is higher than the safe level.
“This isn’t some ideological issue. It is about making sure that we have the capacity to make sure that we can respond to any future shock to the economy.
“There will be economic cycles in the future. We need to be able to respond to them without taking our debt over 100 per cent of GDP.
The Chancellor, made clear that he would not be making any changes to spending in his statement, and said he would continue to take a “balanced” approach to public finances, if there was any further room for manoeuvre.
“What I will be doing is signalling some areas where we want to consult ahead of the Budget in the autumn,” he said.
“We should be very careful about looking at single sets of figures – one quarter or two quarters. We need to look at what is happening sustainably in the economy.
“If there is the flexibility, the space to do something, we will decide in the autumn how we are going to use that but we will continue to take a balanced approach, addressing the debt problem, reducing taxes for hard working families and putting money into our public services.
“It is wrong to say that every penny of capacity has to go paying down the debt but it is equally wrong that every penny should go into additional public spending. We need a balanced approach.”
He also revealed last week that he would launch a public consultation on how the tax system can be used to cut down on the most environmentally damaging single-use plastics.
The Chancellor will use the Spring Statement to call for evidence from green groups, industry and individuals as to how the Government can build on its plastic bag charge.
The consultation comes after he announced in the Budget in November that ministers would be looking at how the tax system could be used to help deliver the Government’s target of eliminating avoidable plastic waste by 2042.
Mr Hammond will also use his statement in the Commons to unveil a £20 million innovation fund for businesses and universities to develop the new technologies and approaches that will be needed to achieve their goal.
Why is it now called the Spring Statement and not the Budget?
In his first ‘Autumn Statement’ in 2016 Mr Hammond announced he wanted to simplify the process of outlining tax changes and government spending.
In decades gone by, budgets were announced in Spring and were accompanied by a statement in Autumn which provided accounts of Government department’s spending plans.
In the nineties, the Autumn statement developed into more of a pre-budget announcement and became as much of an event as the Spring Budget.
But Mr Hammond decided to scrap the idea of two major events, and decided that the old fashioned Statement or account of spending would be given in March and the Budget would be given in Autumn in order to give more notice for changes to tax laws before the tax year starts in April.
He said the Spring Statement would no longer be a “major fiscal event” and instead would be a speech in response to any forecasts from the Office for Budget and Responsibility.